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tv   Bloomberg West  Bloomberg  May 25, 2016 6:00pm-7:01pm EDT

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but he told the house homeland security committee that more than 760 screeners will be hired by mid-june. >> clearly the summer travel season will be busy and the tsa and congress and travelers working together can improve the passenger experience while we maintain the security we need. most screeners will be sent to chicago, new york, los angeles and atlanta. a state department audit blames hillary clinton in previous secretary of state for poorly managed e-mail practices and systemic weaknesses related to communications that started before her tenure as secretary e-mails wereher single doubt. an aide to donald trump says there's a call to break a weeks long impasse over an endorsement from the speaker, which trump aides believe is imminent. a jailed ukrainian pilot has been sent home from russia.
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she was exchanged for two russian serviceman being held by ukraine. global news 24 hours a day powered by our 2400 journalists in more than 150 news bureaus around the world. i mark crumpton. "bloomberg west" is next. emily: i'm emily chang and this is "bloomberg west." thethe tech giant wave white flag in the smartphone wars? at&t makes its move on yahoo! after holding back in the bidding war, they are now all in. we will tell you what it means for verizon. peter thiel strikes back. funding been secretly hulk hogan and multiple cases
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against a stalker. in the smartphone wars, the latest sign microsoft is giving up on handsets. they've announced 1800 job cuts and a right down close to $18 billion, all tied to its acquisition of nokia. the ceo says we are focusing our phone efforts where we have differentiations and we continue to integrate across devices across our mobile platform. problem, microsoft could never make a dent in an industry dominated by apple. but those giants are struggling to maintain momentum. an opportunity to revisit the smartphone wars. who may be the next company to follow microsoft out of the ring? joining us is the director of mobile device research. microsoft has all but given up. does it mean they have given up? up in they gave
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device war. in terms of software, they haven't. aey mentioned they have management suite. have downloaded software to mobile devices. way they will target the nonmobile markets may be different than the way they want to go in. think they are taken -- taking the right approach and will probably be a more profitable pathway over time. emily: microsoft did not have a lot of market share to begin with, but who gains momentum and who loses? guest: i wouldn't say there's much left to grab. shifts say there are big and the vendors outside of apple
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and samsung, even in this most recent quarter, we saw two new chinese companies under the top five. have dominantly done all their business mostly in china and now are starting to get into the 15%, 20% business internationally. if you look back three or four years, we have seen this come and go over time. those are the companies that we see today. localize players. it won't be chinese. emily: does this mean no phones or tablets for microsoft? guest: i think it is a refocus back on software. are in business to grow and create margin, not in businesses that really have no margin. this business was a tough one and that's the business steve
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ballmer pushed as his last assignment. i think they probably would not have made that decision. my bet is they are cleaning up what was part of the old team and this is the right approach and they are repositioning the company around mobility and the cloud. so it comes in a different form -- the software subscriptions, i get those across any device i have. they don't care what device you have come a they just want the software on it. withhas been resonating those we speak with and that is why you see their enterprise business do so well. are there any other small market share players you can see getting out of the business? localizedhink is
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players will come and go. time will tell as we see the middle east, and board and we see localized players in india, but there are a couple of big name players that have been around that are facing challenges. i would say that's a turning point that could go out of business. sony is kind of in that same space. i hate to call the demise of anyone but there's no question they are struggling to make money on hardware. microsoft is not out of mobile, they are just in it in a different, much more profitable way. emily: isn't nokia still licensing its name? you will see nokia come back. the challenges they are trying to come back from how well microsoft actually took the brand. future phonehe space is a big part of the market and i think hold a lot of weight there and it comes with
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supply chain agreements that will help drive the market under nokia's brand. whether they can do it with smart and android, i think that will be a lot tougher. what is the future of microsoft when there is not a lot of growth and mark -- a lot of growth? guest: the cloud. you see this as a focus point. they are not going to give up the perpetual stuff -- perpetual software business. they want to lead with this solution and if you look at their business in the intelligence cloud, they are outpacing their peers. they have a number of brand new releases and coming out next week, they have a brand-new launch of their database which i think will help them. they have a whole suite of new apps -- analytics, communications, there are different ways they are going
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down that we think are more back to the core of what microsoft was, which was a true enterprise software company. they do care about the consumer, but they understand what they are good at and i think they are going back to their core, which is a good thing. the don't want to accept operating margin decline that they have seen and they want to improve slowly on the operating margin line. this will be a multi-year shift. last quarter was one of the worst they had in a couple of years. you will see that perpetual cloud -- they are pulling along a big business and we think they are architecting the right future, the just going to take time. emily: thank you both for joining us. staying in a smart phone market, hsbc says lenovo is facing a
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mobile crisis. at least three analysts have cut their ratings in the last month alone. lenovo had focus on personal computers but hope smartphones pc the they may report a 38% decline when they report earnings later thursday. a stock we are watching after-hours as hp ink is projecting profits that may fall short of estimates. this is the smaller half of hewlett-packard. the ceo has stepped up efforts boost profitability but faces serious sales declines among its core products. desktop and laptop sales fell nearly 10% and printer sales were down 16%. a story we are watching -- the latest set up for sarah knows. seeing accused in
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a lawsuit of misleading consumers about the accuracy of its blood test results and reliability of its technology. today's lawsuit was filed in san francisco and seeks class action status on behalf of consumers is what was tested from the company. the lawsuit filed today, they say is without merit, and they will defend itself. federal prosecutors in san francisco and federal and state health regulators are also investigating the company. up, at&t and verizon may be competing over more than wireless customers as at&t throws its hat in the ring for yahoo!. ♪
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emily: alibaba is under investigation from the sec. they're looking into the company's accounting practice and whether they violate federal law. alibaba'socess -- shopping bush and will be under scrutiny. shares are down the most in three month on this news. at&t may be competing over more than wireless customers with verizon. the storynews wrote at&t is making a bid for yahoo!. it is a change in course for the telecom giant. puts them against verizon, which has long been considered the front runner. the reporter who helped break
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the story joins us from new york. lay it out for us -- who are the bidders because it -- verizon may have been the front runner but did not have the highest did. guest: that's right. verizon is the company people assumed would be the front runner. they own a business doing something similar with aol, so they thought it made the most sense. to be clear, this was an asset 40think attracted expressions of interest when it came into the market. that has narrowed down as the process has gone through its stages. at&t are also interested where we have an at&t versus horizon scrap for this. would at&t get out of owning yahoo!? what would they do with the assets? it's not exactly clear because yahoo! is an interesting
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amalgamation with various businesses and at&t could take them in all kinds of directions. but one thing that would be interesting is a sort of algorithmic advertising business. at&t could pair that with its mobile devices, so we could see it do something like that and that would set it up as a competitor to what verizon is doing. could this come down to a two way bidding war? guest: it could. there are other parties interested. there's at least one more round to go through. probably three or four more weeks left to run. there's still a lot of potential so it, some consortiums, could come down to those two but it is not there yet. emily: what about price? there have been reports with
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much lower numbers. has that happened? are they getting lower bids? guest: the report i think you are referencing suggested the bits that were coming in were way below expectations. from what we understand, that was gobbledygook and the bids are coming in closer to the between $4 billion and $8 billion, which is a large range, which is why we may be seeing this situation with verizon despite being the highest bidders. emily: thank you for putting those gobbledygook rumors to rest. a genetically engineered mosquito that could stem the spread of the zika virus. we will hear from the man leading the charge, next. ♪
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ofly: on wednesday, members congress heard testimony on how the u.s. could repair against a zika epidemic in the united states. been reported in 62 countries and the viruses linked to 544 travel related cases in the u.s.. u.k.-based biotech firm once the fda to invoke emergency powers to provoke a medical response in the absence of other alternatives. a have been galloping mosquitoes that are genetically engineered to stem the virus. companyrter visited the to see how these insects would help.
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>> this is the lab at the forefront using genetically modified mosquitoes. >> we have created a strain of the mosquito that's red dengue and zika virus. spreads dengue and zika virus. we released the males into the wild and the offspring inherit the genes and die. >> one is a self-limiting gene in the second one turns the insect red, allowing them to be tracked. >> what we are doing is giving the mosquito the biggest this advantage -- it cannot -- biggest disadvantage -- it cannot reproduce effectively. we've done trials in malaysia and came in and panama. the bulk of the work has been done in brazil. you we have shown as if conduct a program releasing these mosquitoes, you can ring the wild population down by over
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90% in just six months. so far proven and effective tool that could be scaled up. millions of mosquitoes could be bred in a lab like this in a matter of months. the technology is not without its critics, but they say the system is safe. they say there's little evidence that wiping out this variety of mosquitoes would damage the ecosystem. they say they are ready to expand the fight against the zika virus. emily: joining me now for more is the ceo of the company. how yourall, explain technology works and once you release these mosquitoes into the wild what the impact is. once we release them, we release males. they don't bite and they go off and do what male mosquitoes do best, which is looking for the females. when they find them, they mate
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with them and every time they mate with a female, those offspring will die. what we have shown in various field trials as we can reduce the population of mosquitoes of the type that spread the zika in six months, which is an unparalleled level of control. you first develop this back in 2002. you have been working on this for years. explain that if these emergency powers are invoked what that would enable you to do. had the emergency authorization, what that would enable us to do is set up programs to help protect people from the point at which the authorization was given. at the moment, we have been going through a regulation process and the fda have come out with a preliminary review of no significant impact, meaning
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it is safe to humans and the environment. the emergency would allow us to get quicker into position where we can deploy these and protect people from these mosquitoes. have applied to the fda for an approval for trial in the florida keys. with these emergency powers impact the trial? guest: not necessarily. s is aocess in the key trial were you go through a long regulatory system and go through a trial as a way of reading all of the process together. you need to go through that process anyway. the emergency powers would let us protect many more people. the authorization only lasts as long as the emergency is there. you would still go through on both parts. testified the
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mosquitoes could be targeted to a very specific area. how do you do that? guest: it is down to the biology of the mosquito. mosquitoes don't fly very far. they only fly about 200 yards in their lifetime. because we are releasing male mosquitoes, they don't travel that far and you can target these mosquitoes to areas of a city or town or country where you think there is the greatest risk and have high mosquito numbers or disease transmission. because they don't live very far and the offspring die, the effect is very localized and very controlled. the world's attention is focused on zika, but how could genetic engineering of insects, what else could that he used to prevent like dengue fever or yellow fever? guest: the sad fact is the
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mosquitoes adding the zika virus also spreads yellow fever, and gave fever, and a virus that's in with over a million cases 2014. this one species is public enemy number one when it comes to spreading diseases in our towns and cities. genetic engineering can also be used for controlling insect pests that damage crops. more environmentally friendly because you are only targeting one insect each time that is causing the problem, whether it is spreading the disease in town or actually competing with mankind for its food sources. can look at controlling insects in agriculture, and public health, and in animal health as well. it is fascinating work
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you are doing. thank you for joining us today. coming up, revelations that one of silicon valley's most prominent investors has been backing a lawsuit that could -- that couldne bring down at gawker media. more "bloomberg west" next. ♪
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mark: i'm mark crumpton. let's begin with a check of your first word news. president obama says he plans to use his historic visit to hiroshima with the japanese prime minister to reflect on the
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suffering of war. president obama: our visit will honor all of those who were lost in world war ii and reaffirm our shared vision of a world without nuclear weapons and highlight the extraordinary alliance we have been able to forge over these many decades. the japanese prime minister says he has no plans to visit pearl harbor. a house committee voted to address puerto rico's $70 billion debt crisis. the ill will not be acted on until after the memorial day recess and faces action in both chambers of commerce -- of congress. it may not be ready in time for puerto rico's debt payment. news is suing over a directive of transgendered students in public schools. it accuses the administration of
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running roughshod over commonsense policies that protect children. i'm mark crumpton. it is just after 6:30 in new york. 30 on thursday morning in sydney. i'm joined by paul allen for a look at the morning markets. paul: a strong read on wall street and not translating into gains in new zealand. looking pretty flat but traders are probably waiting on the budget for that is in the lockup right now. the new zealand budget likely to be delivered in the next few hours. dips expected to show a back into a deficit after a small surplus was reported a year earlier. in japan, futures are looking positive. likely to be positive as we wait on private numbers, looking for an impact on the australian dollar. it has been the worst performing major currency this month, off
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4% prompted by the reserve bank 1.75%g the cash rate to in response to weak inflation. maybe some respite when june rolls round if the federal reserve in the u.s. holds off raising rates and if the reserve bank of australia holds off cutting them again. looking at the g7 leader meeting in japan, china not part of the g7 but there activities regarding land reclamation in the south china sea are likely to be on the agenda. emily: leaner investor and facebook or to member, peter thiel secretly help to bankroll the defamation lawsuit that
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resulted in a $148 million verdict against gawker media. the suit was filed by hulk hogan in 2012 and the ruling on the case threatens the website is very existence. it is completely legal for third parties to financially bank lawsuits they are not participating in but his involvement highlights high well-funded individual can hold sway over a media organization. we should note that neither peter thiel or the attorney responded to a request for an interview. my guest is a technology law attorney. what is your take on this? a shockingite revelation but we should all use the caveat that this is based on a single report from an ominous source. emily: bloomberg has also
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confirmed the report. i am pretty sure there's another shoe to drop your. this is quite something. "what'd you miss?" emily: what is the other shoe? guest: i don't know yet. i don't think this is the end. is what we have talked about in private on many occasions -- the role of technology in everyday life and society is so much more now that every little action gets magnified in every little thing has an impact. the scale of money being made in silicon valley has not and seen before. see, including the suppose it actions of peter thiel, which i have no idea if they are for real or not, they are magnified because of the scale with which things can happen.
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what he is doing if he is doing this is very threatening for the future of media. emily: i will tell you that i personally confirmed this information that we reported. the tweets have been flying over this incident and i wanted to read a few of them. first, you think you could buy a thicker skin with a billion dollars. another one, good for him, gawker is an amoral math. leaders want to destroy media, they should get buying russian way by them and letting incompetent grandchildren ruin him. let's talk about legal issues on all sides. third parties funding lawsuits is nothing new and not illegal. not new, not illegal. i don't think there are huge first amendment issues here. the first amendment is not implicated in the sense that the possibility of lawsuits based on disclosure of private facts, the
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possibility of lawsuits based on label -- on libel has always been there. the oneer issue than that is less sexy for the perspective of the media is that jury verdict are often out of control in terms of the amount awarded. it's a florida thing and we have a small town where this jury came up with this huge mountain i think that's bigger issue more than the constitutional issue. if there is a concern going forward, it's a short term -- a copycat effect. effect is always out there when something gets this much press but it is a short-term issue. emily: we have heard the appeals could go on for years but there are bigger implications. peter thiel is a board member of facebook which just found itself embroiled in its own controversy that it was against conservative
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news stories. the irony being that peter thiel is a delegate for donald trump. he's called gawker the silicon valley equivalent of al qaeda. what does it mean for facebook? facebook has to tread carefully. they got into trouble when mark andreessen made comments. ceo, youany and as a have to be careful who you surround yourself with. every action of those individuals has an equal and opposite reaction on your company, your stock -- emily: shouldn't the board represent a diverse viewpoint? the corporate level. because facebook is such a part of people's lives, it is essentially the media and steve for most people. it needs to tread that path very carefully. i have always believed facebook should have the equivalent of an ombudsman in the company so that
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they can portray if they are doing things right. the journalist who wrote this story has been on twitter defending the original story saying it was common knowledge gay andter teal was nobody felt they could talk about it. he tweeted journalism admire surrey -- four outing a person, consider whether it makes defamatory assumptions. the reporting indicates peter thiel was stung by this original story in 2007. was that fair game? it was fair game. when we talk about libel and stander -- libel and slander, truth is an absolute defense. is, the pressnal saying he was gay when he was not public with that might be unfortunate from a personal
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perspective, but if it is true, it is not liable or slander. it can be disclosure of a private fact, which can be actionable. i think people have a choice to live their life whichever way they want. i don't really care but i would say because we live in the times attention onhe technology and the industry we are part of is much more. it's not just technology, it's personality and spectacle of technology and you are beginning to see more and more of that happen, so you will see more such actions happen all the time. i think the industry which was very small and focused on doing touching things is now society in many ways and the scrutiny is much higher. peter thiel funded an
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organization to protect the rights of journalists. a you think this could set precedent that would jeopardize freedom of the press, or is that taking it too far? guest: i think it is taking it way too far. this is an action about a video and i hate to see law made around sex he is, certainly constitutional laws. i am hard-pressed to see this as a constitutional issue. i do see it as an issue of a jury awarding damages that are over the top. marc grossman, thank you for joining us on the show. to another story we are following -- transfer lies have joined the unicorn club, raising $26 million in its latest round led by an investment that is
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term. this brings the valuation to over a billion dollars, making it one of london's few unicorns. they did not officially disclose their valuation. it also includes andreessen andwitz, peter thiel richard branson. coming up, eric schmidt on health, politics and more. we have his exclusive interview from the bloomberg breakaway summit. and we will review all of our best interviews from the week, including dave mcclure on what is happening to valuations in silicon valley. ♪
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streaming services like netflix and itunes could see more regulation in the european union. wednesdayublished on say 20% of video libraries will need to be dedicated to european content as a way for europe to support its domestic energy meant industry. right now, netflix is just above what was set. eric schmidt spoke at the bloomberg breakaway conference and spoke about the big breakthroughs in technology he sees at. john mikel slate asked if the private industry is better the -- better at investing than the government. eric: i'm not ready to fall in the traditional assumption about the government. have a just like to little bit of it on these things that are moving shots, enormous scale things that can benefit
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the country. john: you gave the example of health. what's another example? eric: i will give you two examples -- the health thing is -- it can be understood as analog meets digital. up until now, doctors have been living in an analog world and it's incredibly painful and complicated. we have been living in this digital world where we understand scalable systems. the sequencing machines and all of that kind of stuff, so you can get proper personal medicine and really change things. that youa technology can reassemble and do gene editing. is transformative not just a little city but of the whole globe. that is how i found it is. it is a race.
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there is a similar one with ai and machine learning. that's one category. , the most interesting question to me is can you -- i will say it rhetorically -- can you solve climate change which i'm sorry to say is actually true? is true that carbon does lead to these things. there's some evidence the current relative lull in warming has actually slow down a little bit and will get worse pretty soon. i can go on and on about that. whether theing solutions are sufficient to solve this problem 100 years ,rom now and if they are not the most likely solution is nuclear. nuclear has a zillion problems. it has never been able to be driven by the private sector alone. here's the question and i don't know the answer -- do you need a federal program to drive safe
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nuclear? that is an example of the kind of debate. i'm not taking a position because i'm not a physicist. john: out of the existing candidates, in general, do you see any sign that they are thinking in these ambitious ways on the presidential trail? eric: it's important to them or that campaign season is silly season. too much about it. it's more of a question of do you believe the presidency and the leaders in europe understand the importance of science and so forth. there has been a problem on the republican side that there's a group of republicans, but not all of them, who do not admit to the importance of science and i mean that specifically the technology platforms. i don't know, whatever the prejudices and maybe there's a
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similar group on the democratic side. it is a real problem when science is politicized. where does that matter to you? if we have not figured out how to do stem cells from blood, you might be dying from some disease because of some advanced technique is not available to you. this stuff matters. remember all of the debates about stem cells? ofly: eric schmidt, chairman mouth about, talking with john mikel swayed at the bloomberg live breakaway summit in new york. bird --natics is on the on the verge of being one of the biggest players in sports merchandise with help from the warriors. ♪
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followingtory we are -- a solar powered airplane on its way to allentown, pennsylvania. took off impulse ii from ohio earlier on wednesday. the flight was expected to take about 17 hours. the plane will make one more stop in new york before crossing the atlantic ocean to europe. to become oneised of the biggest players in sports merchandise. deals thanks in part to a with the nfl players association. but right now, the focus is on the nba and the golden state warriors. warriors merchandise is the highest selling in the league. it outsells all other players and 48 of 50 states. but with the team trailing the oklahoma city thunder, how does it affect fanatics? the ceo
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joins us now. curry was theph best-selling jersey but it has become even more so. guest: the warriors and curry are really a sensation. it's up to hundred percent over last year. but the story within the story has been curry. he still number one selling jersey. what is cool to see it how he's bringing in new segments of fans . he's up a thousand percent with women and up 100% with kids. these great for business. they: how much does business depend on the dubs winning? bigt: wins and losses are a part of licensing. what is interesting about our businesses we have built a diversified portfolio, much like
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a stock portfolio. expanded internationally with acquisitions and european soccer. we are at about 150 universities. that's part of our value proposition is we bring that scale to any given team. if you are having a tough year, it's going to be a tough financial year. we have a full portfolio and can generally ride the growth of e-commerce. so if they lose, no biggie for fanatics? guest: exactly. right now, you have the nhl playoffs. we just had the nfl draft. mlb is a huge business because the cubs are a hot story. winning, we are there to service that demand. no one team or player has a
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significant impact on our results. emily: you guys have mastered the art of getting merchandise out quickly. we have seen this backfire, like when o beckham came on the scene , they could not get merchandise fast enough and then his popularity had eclipsed. how important is that and how do you do that? guest: we have built one of the most important on demand businesses in an on demand economy here. when the lenovo run the -- won the championship, literally championship,that we had villanova championship merchandise listed for sale along with a whole assortment of merchandise. much of it is virtually merchandise that is digitally rendered. we can do a big push out to make fans aware and manufacture and print on demand after the fact. a big part of our businesses data analytics to be prepared for those moments and as we see
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demand come in, go into production. emily: your new deal with the nfl is your first foray into licensing. is it just the beginning? guest: we do have licensing with lots of leagues and schools. this is obviously a big, long-term deal for licensing rights. this is part of being interesting -- bringing interesting merchandise into the on-demand demand business and we have seen tremendous adoption of everything we have put in the market so far. emily: great to have you back on the show. time to find out who is having the best day ever. state ofis the u.s. michigan. google plans to open a self driving development and are in the home of the countries auto industry. the tech company is running to have autonomous cars for companies like uber and gm is
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investing in the technology. google joined forces with fiat chrysler to build self driving cars based on the chrysler hybrid powered minivan. that does it for this edition of bloomberg west. tomorrow, we sit down with the biggest competitor to uber in southeast david -- southeast asia. now from sanr francisco. ♪
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♪ >> from our studios in new york city, this is "charlie rose." charlie: we begin this evening with the fight against isis and the operation to recapture the city of falluja. 15 iraqi soldiers were reportedly killed in an bar province.meanwhile, a kurdish led forth launched an offensive in syria on territories around raqqa. this is aimed to put pressure on isis forces in their stronghold. joining me from washington is david ignatius. here


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